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Global dairy bidders favour SMP as WMP weakens

This article is powered by Dairy Markets

Whole milk powder (WMP) took a further lurch downwards at the latest global dairy auction today (Nov 7). But there was an unexpected uplift in SMP.

At USD2,852 (EUR2,457) per tonne, WMP is now where it was in March and -14% less than a year ago.

Warnings of lower milk production in New Zealand have fallen on deaf ears, presumably because it is understood that – barring unforeseen disasters – farmers there always seem to bounce back.

It was a different story for skimmed milk powder (SMP), with the average up by more than 1% from the last event to USD1,818 (EUR1,566) per tonne. It was the first significant uplift in skimmed since the powder started to drift down in July.

Fonterra’s medium-heat SMP delivered even stronger growth: up 3% from USD1,788 at the last event three weeks ago to an average USD1,838 (EUR1,584) across five delivery contracts to April.

GDT results, Nov 7

Arla managed a lower USD1,725 per tonne for its Danish low-heat regular grade. It appears to be a better result from last time, when Arla didn’t achieve its asking price and therefore was not obliged to publish its returns. And at the euro equivalent of EUR1,486 per tonne, it is riding high compared to prices in Europe.

The recent decision by the European Commission to release SMP from intervention stores at a loss-making EUR1,445 per tonne has torpedoed any price advance. And prices of around EUR1,440 in Europe (or below) are currently the norm. But SMP from New Zealand is fresher and closer on tap for buyers in the Southeast Asian diaspora.

Fonterra’s anhydrous milk fat AMF continues to prove popular. It edged up to USD6,894 (EUR5,940) per tonne – a five-year record high for the niche long-life butter analogue.

Butter itself slipped by nearly -4% from last time – mirroring recent falls in the European market. After some unprecedented global rises, it seems that the heat is now off for buyers.

Cheddar has see-sawed since a 15% rise in May propelled it to USD4,285 per tonne. At this auction it has slipped by around -2% to just a dollar above USD4,000 per tonne. Competition from US and European traders are likely to keep this market keen into the New Year.

Casein tumbles

Weaker demand signals may also be putting pressure on casein, with the auction price trajectory very much down to the latest average of USD5,465 (EUR4,709) per tonne, the lowest it has been this year.

There were 133 winning bidders out of 165 taking part at the two-hour nine-minute event over 14 bidding rounds.

Just over 35,000 tonnes was sold, with the auction average of USD3,105 down -3.5% from last time, largely reflecting the decline in WMP returns.

The next event is in two weeks’ time on Tuesday November 17. There are just two further online auctions until the end of the year: on Dec 5 and Dec 19.

Auction latest: SMP

Auction latest: WMP

Auction latest: butter

Auction latest: casein

Auction latest: cheddar

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